With two casinos making preparations to reopen this summer, the Atlantic City casino industry will soon be more crowded than it has been in nearly four years.
The question is, are Ocean Resort Casino (formerly Revel) and Hard Rock Atlantic City (formerly Trump Taj Mahal) filling a vacancy in the market, or will their presence cause the market to become overcrowded?
Based on the latest reports from the New Jersey Division of Gaming Enforcement, coupled with research conducted by the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, Atlantic City might be more prepared to handle two more casinos than many people think.
Last year was a good year for every Atlantic City casino.
All seven casinos saw total revenue increase in 2017:
- Bally’s AC: $308,352,000, an increase of 1.8 percent.
- Borgata*: $1,109,281,000, an increase of 3.5 percent.
- Caesars: $442,793,000, an increase of 7.1 percent.
- Golden Nugget*: $316,042,000, an increase of 7.1 percent.
- Harrah’s: $563,022,000, an increase of 1.7 percent.
- Resorts Casino: $239,982,00, an increase of 9 percent.
- Tropicana*: $489,088,000, an increase of 12.3 percent.
And six of the seven casinos saw profits rise year-over-year:
- Borgata*: $292 million, an increase of 19.5 percent.
- Harrah’s: $115.8 million, a decline of 2.7 percent.
- Caesars: $92 million, an increase of 19.5 percent.
- Tropicana*: $92 million, an increase of 71 percent.
- Bally’s: $42.1 million, an increase of 8.1 percent.
- Golden Nugget*: $40 million profit, an increase of 38.3 percent.
- Resorts: $23.1 million profit, an increase of 23.6 percent.
*Borgata, Golden Nugget, and Tropicana combine land-based casino revenue with online gambling revenue.
Two casinos report their NJ online casino revenue separately: Resorts and Caesars.
- After posting a near $800,000 loss in 2016, Resorts Digital generated $14 million in profit off of $42,655,000 in revenue.
- Caesars Interactive-NJ added $11 million profit to the company’s bottom line thanks to online gaming revenue of $30,870,000, an increase of 12.7 percent over 2016.
Bottom line: There were plenty of reasons to celebrate if you were an Atlantic City casino operator in 2017.
Visitation and occupancy
According to research by the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, fewer tourists are making the trek to Atlantic City than at almost any point in the 40-year history of gaming in the city.
However, despite visitation hitting a 36-year low of 24.1 million “tourist visits,” Atlantic City casinos saw occupancy and room rates rise in 2017.
Hotel occupancy rate at the city’s casinos was 86.9 percent in 2017, a year-over-year increase of 5.4 percent. The average room rate was $108.35 during 2017, compared to $106.71 in 2016.
With two new casinos set to open their doors, visitation is likely to increase in 2018, and the added hotel rooms should keep room rates fairly flat in the market.
This bodes well for the immediate future of AC
There’s a lot of speculation that the market will revert to a supersaturated state when Ocean Resort and Hard Rock open this summer. But the top-line numbers from 2017 paint a different picture.
Visitation is near an all-time low and occupancy rates are strong across the board. That seems to indicate there is room, perhaps even a need, for more competition.
And there is a lot of room for growth.
From 1987 through 2010, Atlantic City saw annual visits top 30 million, with a high-water mark of 35 million in 2005.
If the new properties can push visitation back up towards 28 to 30 million, that should create a large enough market to keep all nine (or possibly eight) of the casinos’ heads above water.
”The new arrivals to the Atlantic City tourism market can certainly be expected to generate considerable publicity and large crowds,” says the Levenson Institute report. “The result of all this activity should be a significant surge in visit-trips to Atlantic City this summer.”